SK Hynix shares in Seoul plummeted by a record 15.4% on Monday, echoing an 8.95% drop in South Korea's Kospi index, which led to a 20-minute trading halt. This sell-off followed the company's blockbuster Nasdaq debut last week, where its American Depositary Receipts (ADRs) initially surged by 12.8% to close at $168 after being priced at $149 each. The decline in the Seoul market was exacerbated by foreign and institutional investors offloading large volumes of shares.
The decline in SK Hynix's ADRs continued into Monday, dropping 7.9% to $154.7 in early trading and closing down 9.32% at $152.35. Analysts attribute this slump to several factors, including profit-taking after the US listing, a cautious outlook on SK Hynix's second-quarter earnings, and a moderation of earnings expectations. NH Investment & Securities analyst Ryu Young-ho noted that SK Hynix's greater exposure to the HBM market might make it less resilient to recent price increases in conventional DRAM chips. Meanwhile, Morningstar director Lorraine Tan valued the company at $160 per ADR, suggesting potential for normalization in cycle dynamics.
Adding to the concerns, Korea Investment & Securities projected SK Hynix's second-quarter operating profit to fall 8% short of consensus, forecasting 60.4 trillion won ($40.2 million) against a 65 trillion won estimate. This was primarily due to the company's heavy reliance on high-bandwidth memory (HBM), which is expected to result in slower average selling price growth. The brokerage also cut its 2026 and 2027 operating profit estimates by 9% and 11% respectively, reflecting more realistic pricing assumptions from long-term supply agreements. Despite these concerns, SK Hynix CEO Kwak Noh-jung remains optimistic, forecasting a severe memory supply shortage in 2027 due to demand exceeding production capabilities well into the next decade.
